By Alexandra Wexler | Photography by Gulshan Khan for WSJ

JOHANNESBURG -- For years, hundreds of illegal miners known locally as zama zamas prospected for gold on this patch of land on the outskirts of the city with hammers and chisels in hand-dug tunnels.

Now, the site has been transformed into South Africa's first new underground gold mine in more than 15 years, part of a global rush to boost production of a metal trading at record prices.

"It looked like a Mad Max movie," said Rudi Deysel, chief executive of West Wits Mining, the Australian company that owns the mine. "I had to crawl on my stomach to go in there."

Around $100 million of investment is pouring into the mine, where workers now sport hard hats, carry emergency breathing devices and use advanced drills and other equipment. The project, called Qala Shallows, recovered its first gold in October and is estimated to produce more than $4.5 billion of the metal at current market prices.

Gold futures settled above $5,000 for the first time on Monday, driven by heightened geopolitical concerns among other factors. The precious metal has more than doubled in value in less than two years.

The surge has boosted profits for mining companies around the globe, encouraging them to restart old mines, expand existing operations and develop new projects. Global gold-exploration budgets increased 11% to $6.15 billion in 2025, according to S&P Global Energy.

Newmont, the world's No. 1 gold miner, put its Ahafo North mine in Ghana into commercial production in October. Barrick Mining, the No. 2 gold producer, is this year expected to start underground development of its Fourmile project in Nevada.

In South Africa, the gold boom is breathing new life into an ailing sector. The country was the gold capital of the world for much of the 20th century, churning out nearly half the gold bullion and jewelry ever produced. But since 2007, South Africa has slid from its long-held position as the world's No. 1 gold producer to No. 12 after struggling to attract investment.

Investors view South Africa's aging, deep mines as dangerous, expensive and fraught with labor issues. Soaring wages -- thanks largely to strong unions -- and unmechanized operations make the cost of mining an ounce of gold in the country among the highest in the world.

West Wits first sought funding for Qala Shallows around 2021, but struggled. "Investors, they didn't even want to speak to us," Deysel said. "They just don't like South Africa."

That changed when gold prices began to rally, he said. The project secured funding from a local bank, a development-finance institution and an American mining-finance firm among others.

The new mine, just 10 miles from downtown Johannesburg, has advantages over other South African projects. Apropos of its name, Qala Shallows currently reaches around 200 feet, with a planned depth of close to 2,800 feet. That's a quarter the depth of the country's deepest mine.

The project is also using modern technology. In the pitch black of the mine, mud-splattered men with headlamps drill into the rock in two-man teams, using hydro drills with long, thin nozzles that shoot out pressurized water to loosen the ore. The mine's break-even point of $1,291 an ounce is lower than many of South Africa's big mines, which typically operate deeper underground in more challenging conditions.

Production from Qala Shallows won't be a game changer for the South African gold industry on its own, but it's a positive sign of how record prices are giving a new lease on life to a staid sector.

Harmony Gold, the country's top gold producer, is expanding its Mponeng mine -- the world's deepest -- in a move that will more than double its expected lifespan to 20 years. Meanwhile, Sibanye-Stillwater, the No. 2 producer, is considering reopening its Burnstone mine.

The industrywide rush to boost capacity is presenting challenges. It's harder to find skilled labor and there is now a lengthy wait list for equipment, said Deysel, a geophysicist and mining engineer who has previously worked at various mines across Africa.

West Wits, which also has a gold and copper project in its home market of Australia, hurried Qala Shallows into production a year ahead of schedule to capitalize on skyrocketing prices.

"This was all done with a view to create a very quick cash flow," Deysel said, surveying the shipping containers serving as offices, changing rooms and a lamp room -- where workers don headlamps before heading underground -- above the entrance to the mine.

The zama zamas who previously extracted gold from Qala Shallows were encouraged to move along to other local spots outside of West Wits' license area.

Qala Shallows' payroll is expected to more than double to 400 miners by the end of the year.

The mine is projected to recover about 6,000 ounces of gold in 2026, before rising to some 70,000 ounces a year by 2029. It is expected to have a life of some 17 years.

"The South African gold mining sector has just suffered headwind after headwind over the years," said Izak Odendaal, an investment strategist at fund manager Old Mutual. "Now, to finally get this kind of boost from the gold price is phenomenal."

Write to Alexandra Wexler at alexandra.wexler@wsj.com

(END) Dow Jones Newswires

January 26, 2026 20:00 ET (01:00 GMT)

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